By Steve Caruso for CoinWeek….
Counterfeits are the future.
I admit that coming from me, such a message seems a bit curious… if grim. However, the sad truth is that counterfeits will play a bigger and much more sophisticated part of our hobby’s future whether we wish to face it in time or not.
What was once a game of cat and mouse is quickly becoming an arms race. As researchers like Gregory Dubay have shown us, counterfeiting coins is a booming industry overseas which — despite nominal efforts to rein it in — continues to grow and expand. After the precious metals boom in the wake of the Great Recession, counterfeiters no longer simply focus upon rare key dates, but are willing to simulate even common coins, knowing how easily they can slip under the radar of an inexperienced numismatist looking for a deal or a seasoned dealer if mixed into a larger lot of genuine coins.
Luckily, the greatest weapon in this arms race is still education, and that is what The Black Cabinet — the project I am a part of — is all about: Making information about common counterfeits freely available and accessible.
The namesake of the project, of course, comes from the title given to a small reference collection of counterfeit coins which many serious collectors keep to educate themselves with. “Know thy enemy,” states the old platitude, and with hundreds of counterfeits cataloged and thousands of examples yet to go in The Black Cabinet’s database, it is proving to be an ambitious project.
By the end of this year — through my own efforts and those of a number of volunteers — I hope to have at least 1,000 examples of fakes presently circulating among collectors, dealers, and even pocket change, with full photographs, provenance, and identification keys at the fingertips of every visitor to the website. This information has already saved hundreds of hobbyists from being defrauded and has helped take down a large number of fakes for sale on such sites as eBay, iOffer, and the infamous AliBaba.
So what can we look forward to in the future for counterfeiting?
The current trend presently seeks to circumvent the protections of third party grading. Where before counterfeiters would simply turn out fake coins, they are now manufacturing fake third party grading holders and in the process are copying genuine certification numbers onto their labels. These fake holders are now becoming so prolific that thousands upon thousands of cert numbers have been compromised. Some cert numbers are so popular that four or five different counterfeiters have made use of them on their own products, absolutely glutting the market with scores of copies which — when their cert numbers are checked — appear to have a valid pedigree for the very same coin.
The sheer numbers of these fake certified coins will only continue to increase at an alarming rate since they are now being manufactured en masse to the tune of tens to hundreds of thousands a year. Scary enough, this is on top of the hundreds of thousands of more common counterfeits produced annually. Indeed, in the past six months alone I have seen no fewer than three examples where counterfeit coins with the same certification number have been offered on eBay concurrently, sometimes when the genuine coin was competing with more than one variety of fake!
The scope of this is simply something that we could not have anticipated when third party grading companies began encapsulating coins. Encapsulation was meant to prevent counterfeits by keeping coins safe and marked in tamper-proof cases. The technology simply wasn’t there to fake the cases along with the coins and make it profitable. That has changed.
What’s worse is that despite this serious shift in counterfeiting strategy, lists and images of compromised cert numbers and slabs have been sporadic, scattered, and very disorganized. A handful will be reported by PCGS, one or two will be highlighted on a blog, or a story will run in a numismatic publication, but no one has stepped up to try and consolidate things into a centralized list, let alone one that is usable. However, when you present a librarian such as myself with a disorganized problem, it’s only a matter of time before they come up with an organized solution (and in truth, I honestly could not help myself…).
At The Black Cabinet we’re trying to spearhead a two-prong solution we’ve entitled the “Counterfeit Certified Coin Search” and “Certification Shield,” both of which take advantage of the metadata that we have been actively gathering. Both of these resources target specific problems inherent to the wiles of counterfeit certified coins.
With each and every counterfeit slab documented on The Black Cabinet, the compromised cert numbers are recorded along with it. Using this data, the Counterfeit Certified Coin Search allows a user to look up a cert number on any coin and immediately see if there are any compromised examples in the database. The search provides pictures and other pertinent identification information for direct comparison, and in many cases images of the genuine coin are documented along with it. This way anyone who is looking at a listing on, for example, eBay can check a cert number to see what chances there are that the coin they are looking at is genuine.
On the other side of things, checking a single cert number before you place a bid is a boon, but how can a collector or dealer — someone who potentially has hundreds of certified coins to keep track of — easily find out if one of their real coins has been compromised with a fake? If its certification number is compromised, the confidence of a potential buyer is compromised, and that may drive the value and desirability of the coin down.
One would essential have to check every cert number on the Counterfeit Certified Coin Search over and over again at a regular intervals to ensure that everything is alright. This, needless to say, is tedious. The mechanism behind Certification Shield seeks to prevent that tedium by allowing anyone with a Black Cabinet account to save a list of their cert numbers and receive an email alert if a match is added to the database at a future date, bringing the problem to their attention. From there they can contact the grading company to get their coin re-holdered with a new number, or take other precautions to ensure that their coin’s reputation is protected.
So will this make the hobby safer?
Yes, it most certainly will. The amount of good it already has done is what is making The Black Cabinet a popular resource. Putting this information out to the public is the surest way to prevent deception. Any “safety” from this point on, however, we must assume will be temporary.
With the introduction of a stronger cat, counterfeiters will inevitably think up a cleverer mouse — it is simply a matter of time. With TPG holders it took about 20 or 30 years before counterfeiters started to mass produce them in the necessary quality and quantity to be a threat, and the technology is improving daily to the point that the next major shift could will be much sooner. I have already begun to seriously speculate how they may circumvent The Black Cabinet’s listings and I have no doubt that Third Party Grading companies are making similar assessments upon their own services.
I’m sure we all fantasize about a time when participants in our hobby know enough that no one would need to rely upon third party grading or counterfeit reference materials. In the meantime, however, the better the resources we have the more informed our hobby will be, and that is a thing worth fighting for.
Steve Caruso, MLIS, is the Curator of The Black Cabinet, an online database and physical reference library of counterfeit American coins presently in circulation. He will be sharing trends and information about how counterfeiting is affecting the hobby in an upcoming bi-weekly column here on CoinWeek, so be on the lookout.